Fundamentals, valuation and the relative growth outlook unambiguously support the downside in EUR/SEK. However, the Riksbank, to the extent that it is credible, has closed that door for now.
The Riksbank may not have a specific SEK rate in mind but it will not be passive if EUR/SEK falls rapidly. It is the speed rather than the exact level that is a concern. Should the Riksbank, make no further changes in April, it could lead to some SEK appreciation.
However, Danske Bank still expects a cut to -0.30% and an additional SEK30bn of QE within six months, which should help to keep the krona at weak (undervalued) levels.
